Questions to Ask Before Buying Health Insurance

What network type is it?

The network rules decide which doctors you can see and how much it costs to see someone outside the network. HealthCare.gov describes the three most common network types this way.

An HMO usually limits coverage to doctors who work for or contract with the plan, and it generally will not cover out-of-network care except in an emergency. A PPO builds a network of participating hospitals and doctors, but it generally still lets you see out-of-network providers at a higher cost.

An EPO is "a managed care plan where services are covered only if you go to doctors, specialists, or hospitals in the plan's network," again with an exception for emergencies. Ask directly which type a plan is before assuming you can keep seeing a particular doctor.

If you are 65 or older, Medicare, not an individual health plan bought this way, is generally how you get coverage. The questions on this page mostly apply to plans people buy before Medicare eligibility, or outside it, such as through an employer or the marketplace.

Deductible, copay, coinsurance, and out-of-pocket maximum

These are four different numbers, and mixing them up is a common mistake. A deductible, per HealthCare.gov, is the amount you pay for covered health care services before your insurance plan starts to pay.

The out-of-pocket maximum is the most you have to pay for covered services in a plan year. Once you hit it, your health plan pays 100% of the costs of covered benefits. That maximum includes what you pay toward your deductible, copayments, and coinsurance for in-network care, but it does not include your monthly premium.

Copays and coinsurance are both ways you share costs, usually after you meet your deductible, but they work differently. A copayment is "a fixed amount ($20, for example) you pay for a covered health care service." Coinsurance is "the percentage of costs of a covered health care service you pay (20%, for example)." A plan with a flat $30 copay for a specialist visit costs you the same $30 regardless of the bill. A plan with 20% coinsurance costs you more or less depending on what the visit billed.

• Ask what your network type is, and whether it covers any out-of-network care.
• Ask for the deductible and the out-of-pocket maximum, and whether your premium counts toward either.
• Ask whether specific services are copay, coinsurance, or both.
• Ask whether your prescriptions are on the plan's drug formulary, and at what cost tier.
• Ask whether your specific doctors and hospital are in network today.
• Ask which services require prior authorization before the plan will pay for them.

Check the drug formulary and your doctors

A formulary, per HealthCare.gov, is "a list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits," also called a drug list. If you take a regular medication, check the formulary before you enroll, not after, since drugs can sit in different cost tiers or be excluded entirely. The same goes for your doctors: your agent can confirm they are currently in the plan's network, since network lists can change.

Prior authorization

Some services and prescriptions require your plan's approval before it will pay. HealthCare.gov defines prior authorization as "approval from a health plan that may be required before you get a service or fill a prescription in order for the service or prescription to be covered by your plan." If you have a planned procedure or an ongoing prescription, ask whether it needs prior authorization and how long that approval typically takes.

What short-term plans and health sharing ministries may not cover

These are not standard health insurance, and the questions above do not apply to them the same way. Short-term, limited-duration health plans are excluded from the federal definition of individual health insurance coverage, so they are not required to follow the Affordable Care Act's consumer protections.

According to the NAIC, these plans do not always cover essential health benefits such as maternity care, prescription drugs, or mental health care. They are typically medically underwritten, can exclude coverage for pre-existing conditions, and can impose annual and lifetime dollar limits.

Health care sharing ministries are a different arrangement entirely: members share costs voluntarily rather than buying insurance. The NAIC notes these organizations do not have to comply with the consumer protections of the federal Affordable Care Act (ACA), such as covering treatments for pre-existing conditions or capping out-of-pocket costs, and they typically lack a negotiated provider network.

They also cannot guarantee the payment of claims, meaning a ministry may share funds with a member who has a medical need but is not legally required to.

A licensed agent can walk you through how a specific plan handles your medications, your doctors, and your expected care for the year.